The Propel Funeral Partners Ltd (ASX: PFP) share price has risen sharply, it's up 11% in early trade in response to releasing its annual result for the 12 months to 30 June 2018.
Total revenue increased by 76% to $80.9 million from $46.1 million a year before. Average revenue per funeral rose by 5.5% to $5,508 and funeral volumes rose by 67% to 10,111.
Pro-forma operating earnings before interest, tax, depreciation and amortisation (EBITDA) grew by 75% to $21.5 million and pro-forma operating earnings before interest and tax (EBIT) increased by 75% to $18.4 million.
Pro-forma operating net profit after tax (NPAT) increased by a pleasing 128% to $12.5 million and pro-forma basic earnings per share (EPS) also increased by 128% to 12.7 cents. The initial dividend payout is a fully franked 6.4 cents per share, 10% higher than the forecast in the prospectus.
Morningstar analysts were expecting Propel to report EPS of 12.1 cents and a dividend of six cents per share, so clearly the operating result was better than expected.
However, the reported statutory result was a reported loss of $14.3 million as a result of a non-cash share-based payment expense as well as transaction costs relating to the IPO.
Propel had $28.3 million of cash on the balance sheet at the end of the financial year, with a $50 million facility arranged and undrawn.
Management believe the business is well positioned to generate sustainable long-term growth. In FY19 Propel will get the benefit of full-year contributions from its FY18 acquisitions as well as part-year contributions from new acquisitions like Newhaven Funerals.
Foolish takeaway
I was pleased reading through this result from Propel. There were a lot of pleasing factors such as the sizeable increase of the average price per funeral. A better dividend than expected was also pleasing, although I hope management maintain a disciplined balance sheet and are careful with acquisitions in regards to the price paid.
I plan to slowly accumulate Propel shares at a decent price over the coming years.
